<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission file number 0-10849
SOUTHSIDE BANCSHARES CORP.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1262037
- ------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3606 GRAVOIS AVENUE, ST. LOUIS, MISSOURI 63116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 776-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
At AUGUST 12, 1999, the number of shares outstanding of the registrant's
common stock was 8,624,978.
<PAGE> 2
SOUTHSIDE BANCSHARES CORP.
INDEX
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at
June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income for
the six months and three months ended
June 30, 1999 and June 30, 1998 4
Condensed Consolidated Statements of Shareholders'
Equity and Comprehensive Income for the six
months ended June 30, 1999 and the year ended
December 31, 1998 5
Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 1999 and
June 30, 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures
Regarding Market Risk - There have been no material changes
from the information provided in the 12/31/98 Annual Report
on Form 10-K.
</TABLE>
Part II. OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
</TABLE>
2
<PAGE> 3
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
(dollars in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
JUNE 30, December 31,
1999 1998
-------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 20,223 $ 17,924
Federal funds sold 25,150 29,900
Investments in debt securities:
Available for sale, at fair value 147,165 97,895
Held to maturity, at amortized cost
(fair value of $73,144 in 1999, and $85,841 in 1998) 72,779 84,036
-------- --------
Total investments in debt securities 219,944 181,931
-------- --------
Loans, net of unearned discount 340,646 356,988
Less allowance for possible loan losses 6,138 6,192
-------- --------
Loans, net 334,508 350,796
-------- --------
Bank premises and equipment 17,289 16,152
Other assets 14,861 13,590
-------- --------
TOTAL ASSETS $631,975 $610,293
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 69,813 $ 70,436
Interest-bearing demand and savings 219,310 207,762
Time deposits 227,972 245,091
-------- --------
Total deposits 517,095 523,289
Securities sold under agreements to repurchase 2,351 2,949
FHLB borrowings 44,205 14,287
Other liabilities 4,164 4,804
-------- --------
Total liabilities 567,815 545,329
-------- --------
Commitments and contingent liabilities
Shareholders' equity:
Cumulative preferred stock, no par value, 1,000,000 shares
authorized and unissued - -
Common stock, $1 par value, 15,000,000 shares authorized,
8,985,378 shares issued and outstanding in 1999 and 1998 8,985 8,985
Surplus 5,361 5,248
Retained earnings 56,933 55,249
Unearned ESOP shares (1,087) (1,186)
Treasury stock, at cost, 360,400 and 324,020 shares in
1999 and 1998, respectively (4,026) (3,590)
Accumulated other comprehensive income (loss) (2,006) 258
-------- --------
Total shareholders' equity 64,160 64,964
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $631,975 $610,293
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX AND THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(dollars in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 14,671 $ 14,285 $ 7,200 $ 7,126
Interest on investments in debt securities:
Taxable 4,981 4,504 2,716 2,255
Exempt from Federal income taxes 819 696 413 371
Interest on short-term investments 711 592 406 322
--------- --------- --------- ---------
TOTAL INTEREST INCOME 21,182 20,077 10,735 10,074
========= ========= ========= =========
INTEREST EXPENSE:
Interest on interest-bearing demand and savings deposits 3,021 3,140 1,542 1,588
Interest on time deposits 5,901 5,989 2,872 2,960
Interest on securities sold under agreements to repurchase 61 102 32 46
Interest on FHLB borrowings 787 93 578 93
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 9,770 9,324 5,024 4,687
--------- --------- --------- ---------
NET INTEREST INCOME 11,412 10,753 5,711 5,387
Provision for possible loan losses 30 30 15 15
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 11,382 10,723 5,696 5,372
========= ========= ========= =========
NONINTEREST INCOME:
Trust department 600 538 304 275
Service charges on deposit accounts 701 639 357 326
Gains on sales of loans 214 70 92 53
Other 264 292 96 142
--------- --------- --------- ---------
TOTAL NONINTEREST INCOME 1,779 1,539 849 796
========= ========= ========= =========
NONINTEREST EXPENSES:
Salaries and employee benefits 4,529 3,984 2,293 1,972
Net occupancy and equipment expense 1,343 1,080 702 544
Data processing 377 231 190 120
Other 2,783 2,319 1,450 1,161
--------- --------- --------- ---------
TOTAL NONINTEREST EXPENSES 9,032 7,614 4,635 3,797
========= ========= ========= =========
INCOME BEFORE FEDERAL INCOME TAX EXPENSE 4,129 4,648 1,910 2,371
Federal income tax expense 1,099 1,288 482 649
--------- --------- --------- ---------
NET INCOME $ 3,030 $ 3,360 $ 1,428 $ 1,722
========= ========= ========= =========
SHARE DATA:
Earnings per common share - basic $ 0.36 $ 0.41 $ 0.17 $ 0.21
========= ========= ========= =========
Earnings per share - diluted $ 0.35 $ 0.40 $ 0.16 $ 0.20
========= ========= ========= =========
Dividends paid per common share $ 0.16 $ 0.14 $ 0.08 $ 0.07
========= ========= ========= =========
Average common shares outstanding 8,407,802 8,121,711 8,416,538 8,124,843
========= ========= ========= =========
Average common shares outstanding,
including potentially diluted shares 8,623,062 8,367,867 8,624,707 8,383,857
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 1999
AND YEAR ENDED DECEMBER 31, 1998
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
Accumulated
Unearned Other Com-
Common Retained ESOP Treasury prehensive
Stock Surplus Earnings Shares Stock Income (Loss) Total
------- ------- -------- -------- -------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $8,577 $ 305 $50,841 $(1,384) $(1,820) $ 134 $56,653
Comprehensive income:
Net income - - 6,810 - - - 6,810
Change in net unrealized gain
(loss) on available for sale
securities, net of tax effect - - - - - 124 124
------ ------ ------- ------- ------- ------- -------
Total comprehensive income - - 6,810 - - 124 6,934
Cash dividends paid ($.29 per s re) - - (2,402) - - - (2,402)
Allocation of 37,062 shares to ESOP
Participants - 263 - 198 - - 461
Stock options exercised - (90) - - 90 - -
Issuance of 408,348 common shares
in acquisition 408 4,770 - - - - 5,178
Purchase 140,000 common shares
for treasury - - - - (1,860) - (1,860)
BALANCE AT DECEMBER 31, 199 8,985 5,248 55,249 (1,186) (3,590) 258 64,964
------ ------ ------- ------- ------- ------- -------
Comprehensive income:
Net income - - 3,030 - - - 3,030
Change in net unrealized gain
(loss) on available for sale
securities, net of tax effect - - - - - (2,264) (2,264)
------ ------ ------- ------- ------- ------- -------
Total comprehensive income - - 3,030 - - (2,264) 766
Cash dividends paid ($.16 per share) - - (1,346) - - - (1,346)
Allocation of 18,531 shares to ESOP
participants - 113 - 99 - - 212
Purchase 36,380 common shares
for treasury - - - - (436) - (436)
------ ------ ------- ------- ------- ------- -------
BALANCE AT JUNE 30, 1999 $8,985 $5,361 $56,933 $(1,087) $(4,026) $(2,006) $64,160
====== ====== ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,030 $ 3,360
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,184 688
Provision for possible loan losses 30 30
Gains on sale of loans (214) (70)
Other operating activities, net (713) (699)
-------- --------
Total adjustments 287 (51)
Originations of loans for sale (5,195) (4,323)
Proceeds from sale of loans 7,540 4,347
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,662 3,333
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in Federal funds sold 4,750 2,500
Proceeds from maturities of and principal payments on
debt securities 29,544 31,718
Purchases of debt securities (71,382) (40,982)
Net decrease in loans 13,901 4,962
Recoveries of loans previously charged off 184 173
Purchases of bank premises and equipment (1,723) (1,901)
Proceeds from sales of other real estate owned and other
foreclosed property 19 69
Cash and cash equivalents acquired, net of cash - 8,238
-------- --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (24,707) 4,777
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and savings deposits 10,925 9,199
Net decrease in time deposits (17,119) (11,263)
Net decrease in securities sold under agreements to repurchase (598) (3,050)
Net increase in FHLB borrowings 29,918 11,497
Purchases of treasury stock (436) (333)
Cash dividends paid (1,346) (1,109)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 21,344 4,941
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,299 13,051
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 17,924 18,302
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20,223 $ 31,353
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowings $ 10,157 $ 9,430
Income taxes 1,779 1,430
======== ========
Noncash transactions:
Transfers to other real estate owned in settlement of loans $ 41 $ 48
Issuance of stock in financing of acquisition - 5,178
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
SOUTHSIDE BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. They do not include all information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals, considered necessary for
a fair presentation have been included. For further information, refer to
Southside Bancshares Corp.'s (the Company) Annual Report on Form 10-K for the
year ended December 31, 1998. Operating results for the six months ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1999.
SEGMENT INFORMATION
The responsibility for management of the subsidiary banks remains with the
officers and directors of the respective banks. The financial performance of
the Company is measured internally by subsidiary bank results and key
performance measures. The following table shows the financial information of
the Company's subsidiary banks for the first six months of 1999 and 1998. The
"Other" column includes the Parent Company and all intercompany elimination
entries.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
---- ---- --- ---- ----- ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 7,461 $ 1,145 $ 1,742 $ 1,113 $ (49) $ 11,412
Provision for possible loan losses - 30 - - - 30
Noninterest income 1,312 121 174 135 37 1,779
Noninterest expense 5,756 759 929 715 873 9,032
Income taxes 735 153 286 173 (248) 1,099
Net income 2,282 324 701 360 (637) 3,030
AVERAGE BALANCES
Loans $222,939 $40,088 $49,826 $36,901 $(1,384) $348,370
Assets 413,205 61,260 89,847 57,665 2,698 624,675
Deposits 335,226 55,028 78,184 52,317 (347) 520,408
FINANCIAL RATIOS
Return on assets 1.10% 1.06% 1.57% 1.25% - 0.97%
Return on equity 10.18% 10.81% 15.16% 14.31% - 9.29%
Net interest margin 4.23% 4.12% 4.39% 4.00% - 4.05%
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1998
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
---- ---- --- ---- ----- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 6,818 $ 1,195 $ 1,738 $ 1,064 $ (62) $ 10,753
Provision for possible loan losses - 30 - - - 30
Noninterest income 1,071 107 190 134 37 1,539
Noninterest expense 4,584 675 883 694 778 7,614
Income taxes 834 193 302 169 (210) 1,288
Net income 2,471 404 743 335 (593) 3,360
AVERAGE BALANCES
Loans $194,965 $41,019 $52,354 $37,030 $(1,505) $323,863
Assets 348,870 59,311 90,174 54,799 212 553,366
Deposits 302,142 52,898 79,354 49,815 (800) 483,409
FINANCIAL RATIOS
Return on assets 1.42% 1.36% 1.65% 1.22% - 1.21%
Return on equity 13.64% 13.46% 15.26% 14.70% - 11.64%
Net interest margin 4.40% 4.42% 4.23% 4.16% - 4.31%
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
---- ---- --- ---- ----- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 3,711 $ 585 $ 870 $ 568 $ (23) $ 5,711
Provision for possible loan losses - 15 - - - 15
Noninterest income 637 65 70 73 4 849
Noninterest expense 2,941 407 472 368 447 4,635
Income taxes 325 73 134 88 (138) 482
Net income 1,082 155 334 185 (328) 1,428
AVERAGE BALANCES
Loans $217,746 $40,741 $49,300 $36,858 $(1,384) $343,261
Assets 427,245 62,133 89,624 58,195 1,958 639,155
Deposits 334,408 55,966 70,294 52,850 (347) 513,171
FINANCIAL RATIOS
Return on assets 1.01% 1.00% 1.49% 1.27% - 0.89%
Return on equity 10.37% 10.98% 15.43% 14.20% - 9.47%
Net interest margin 4.29% 4.11% 4.37% 3.99% - 4.08%
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1998
SSNB SBJC BSG BSCC OTHER CONSOLIDATED
---- ---- --- ---- ----- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net interest income $ 3,391 $ 598 $ 864 $ 546 $ (29) $ 5,370
Provision for possible loan losses - 15 - - - 15
Noninterest income 583 55 89 67 19 813
Noninterest expense 2,295 337 444 354 367 3,797
Income taxes 421 97 146 87 (102) 649
Net income 1,258 204 363 172 (275) 1,722
AVERAGE BALANCES
Loans $192,846 $40,743 $51,168 $37,763 $(1,505) $321,015
Assets 353,676 59,525 90,748 55,126 147 559,222
Deposits 302,068 53,060 79,463 50,119 (727) 483,983
FINANCIAL RATIOS
Return on assets 1.42% 1.37% 1.60% 1.25% - 1.23%
Return on equity 13.75% 13.47% 15.45% 14.63% - 11.58%
Net interest margin 4.43% 4.41% 4.27% 4.05% - 4.31%
</TABLE>
8
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This discussion is presented to provide an understanding of Southside
Bancshares Corp. and subsidiaries (the "Company" or "Registrant") consolidated
financial condition and the results of operations for the three and six months
ended June 30, 1999 and 1998.
The Company's net income is derived primarily from the net interest income
of its subsidiary banks. Net interest income is the difference (or spread)
between the interest income the subsidiary banks receive from their loan and
investment portfolios and their cost of funds, consisting primarily of the
interest paid on deposits and borrowings. Net income is also affected by the
levels of provisions for possible loan losses, noninterest income, and
noninterest expense.
Statements contained in this Report and in future filings by the Company
with the Securities and Exchange Commission, in the Company's press releases
and in oral statements made with the approval of an authorized executive
officer which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of
1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended). Such statements are based on management's beliefs, and assumptions
made by and information currently available to management and are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those currently anticipated or
projected. When used in the Company's documents or oral presentations, the
words "anticipates," "believes," "estimates," "expects," "intends,"
"forecasts," "plan," "projects," and similar expressions are intended to
identify such forward-looking statements. There can be no assurance that such
forward-looking statements will in fact transpire. The following important
factors, risks and uncertainties, among others, could cause actual results to
differ materially from such forward-looking statements: (1) credit risk, (2)
interest rate risk, (3) competition, (4) changes in the regulatory environment
and (5) changes in general business and economic trends. The foregoing list
should not be construed as exhaustive and the Company disclaims any obligation
to subsequently update or revise any forward-looking statements after the date
of this Report.
9
<PAGE> 10
Item 2. (continued)
FINANCIAL HIGHLIGHTS
COMPARISON OF SELECTED FINANCIAL DATA
(dollars in thousands except share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED Twelve Months Ended Six Months Ended
JUNE 30, 1999 December 31, 1998 June 30, 1998
---------------- -------------------- ----------------
<S> <C> <C> <C>
EARNINGS
Total interest income $ 21,182 $ 42,227 $ 20,077
Total interest expense 9,770 19,857 9,324
--------- --------- ---------
Net interest income 11,412 22,370 10,753
Provision for possible loan losses 30 62 30
--------- --------- ---------
Net interest income after provision for possible
loan losses $ 11,382 $ 22,308 $ 10,723
========= ========= =========
Net income $ 3,030 $ 6,810 $ 3,360
========= ========= =========
SHARE DATA
Earning per common share:
Basic $ 0.36 $ 0.82 $ 0.41
Diluted 0.35 0.80 0.40
Dividends paid per common share 0.16 0.29 0.14
Book value 7.63 7.70 7.48
Tangible book value 7.40 7.26 7.05
Shares outstanding (period-end)(1) 8,624,978 8,661,358 8,542,455
Average shares outstanding 8,407,802 8,297,250 8,121,711
Average shares outstanding, including
potentially dilutive shares 8,623,062 8,554,635 8,367,867
FINANCIAL POSITION
Total assets $ 631,975 $ 610,293 $ 628,541
Total deposits 517,095 523,289 536,562
Total loans, net of unearned discount 340,646 356,988 367,579
Allowance for possible loan losses 6,138 6,192 6,370
Securities sold under agreements to repurchase 2,351 2,949 2,283
FHLB borrowings 44,205 14,287 19,867
Total shareholders' equity 64,160 64,964 63,910
</TABLE>
SELECTED RATIOS
The table below summarizes various selected ratios as of the end of the
periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED Twelve Months Ended Six Months Ended
JUNE 30, 1999(2) December 31, 1998 June 30, 1998(2)
---------------- -------------------- ----------------
<S> <C> <C> <C>
Loan-to-deposit ratio 65.88% 68.22% 68.51%
Allowance for possible loan losses to total loans 1.80 1.73 1.73
Dividend payout ratio(3) 44.44 39.02 33.01
Return on average assets 0.97 1.15 1.21
Return on average shareholders' equity 9.29 11.12 11.64
Net interest margin on average interest-
earning assets 4.05 4.15 4.31
Average shareholders' equity to average total
assets 10.45 10.38 10.43
Tier I leverage capital to adjusted total
consolidated assets less intangibles 9.75 10.01 10.92
Tier I capital to risk-weighted assets 16.94 16.15 15.86
Total capital to risk-weighted assets 18.20 17.41 17.12
</TABLE>
(1) Shares outstanding at June 30, 1999, December 31, 1998 and June 30, 1998
include 203,841, 222,372, 240,903 shares, respectively, held by the ESOP
which have not been allocated to participants' accounts and thus are not
considered outstanding for purposes of computing book value and tangible
book value per share. These unallocated shares are also excluded from the
average shares outstanding used to compute earnings per common share.
(2) Statistical information is annualized where applicable.
(3) Dividends paid per common share divided by basic earnings per common
share.
10
<PAGE> 11
Item 2. (continued)
FINANCIAL POSITION
Total consolidated assets of the Company have increased $21,682,000 during
1999 to $631,975,000 at June 30, 1999 compared to $610,293,000 at December 31,
1998. This increase was due to a $30,000,000 leverage strategy employed by the
Company to enhance return on equity. The effects of the leverage strategy were
partially offset by a decrease in loans and a drop in time deposits, as
competition for banking relationships remains very strong.
LOAN PORTFOLIO
The Company's loan portfolio consists of business loans to small and
medium size companies, commercial, construction and residential real estate
loans, and consumer loans. Traditionally, the majority of the loan portfolio
has focused on real estate as an integral component of a credit's underlying
source of collateral. The following table is a breakdown of the Company's loan
portfolio as of the end of the periods indicated.
<TABLE>
<CAPTION>
(in thousands)
JUNE 30, 1999 December 31, 1998 June 30, 1998
------------- ----------------- -------------
<S> <C> <C> <C>
Commercial, financial and agricultural $ 63,269 $ 68,166 $ 69,694
Real estate-commercial 111,941 115,214 97,529
Real estate-construction 23,173 21,993 33,350
Real estate-residential 111,392 119,917 131,367
Consumer 22,225 22,219 23,653
Industrial revenue bonds 3,386 4,717 4,996
Other 5,260 4,762 6,990
-------- -------- --------
$340,646 $356,988 $367,579
======== ======== ========
</TABLE>
The Company's loan portfolio totaled $340,646,000 at June 30, 1999, which
represents a decrease of $16,342,000, or 4.6% and 27,233,000 or 7.46%, since
December 31, 1998 and June 30, 1998, respectively. There were two primary
factors, which have contributed to the decrease in loans. First, the interest
rate environment throughout the first half of 1999 continued to attract
borrowers to long-term fixed rate financing, which is typically sold into the
secondary market. As a result, the balance of residential real estate loans
has declined by $19,975,000 and $8,525,000 over the past twelve and six months,
respectively. Second, the local commercial lending environment remains
extremely competitive. Borrowers are being offered financing structures not
previously available including lower interest rates, reduced originations fees,
longer term fixed interest rates, and other options. Management has been
unwilling to provide comparable financing proposals to those received by some
of our existing customers, and consequently these loans have paid off and
contributed to the overall decline in the loan portfolio. In addition to the
decrease in volume, this competition has contributed to the narrowing of the
Company's net interest margin on average-earning assets.
SUMMARY OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
<TABLE>
<CAPTION>
(in thousands)
SIX MONTHS ENDED Twelve Months Ended Six Months Ended
JUNE 30, 1999 December 31, 1998 June 30, 1998
---------------- ------------------- ----------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $6,192 $6,120 $6,120
Provision charged to expense 30 62 30
Loans charged off (268) (536) (210)
Recoveries 184 289 173
Balance of allowance for possible loan
losses of PSB at date of acquisition - 257 257
------ ------ ------
BALANCE AT END OF PERIOD $6,138 $6,192 $6,370
====== ====== ======
</TABLE>
11
<PAGE> 12
Item 2. (continued)
The balance of the allowance for possible loan losses decreased by $54,000
during the first six months of 1999, due to charge offs exceeding recoveries of
loans previously charged off for the period. In addition, the Company recorded
a provision for possible loan losses during the first six months of $30,000.
Based upon the Company's internal analysis
of the adequacy of the allowance for possible loan losses, management of the
Company believes the level is adequate to cover actual and potential losses in
the loan portfolio under current conditions. The ratio of allowance for
possible loan losses as a percentage of total loans was 1.80% as of June 30,
1999 compared to 1.73% at December 31, 1998 and June 30, 1998, respectively.
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
JUNE 30, 1999 DECEMBER 31, 1998 JUNE 30, 1998
------------- ----------------- -------------
<S> <C> <C> <C>
Nonaccrual loans $4,826 $3,189 $2,845
Loans past due 90 days or more and still
accruing interest 375 1,361 1,132
------ ------ ------
TOTAL NONPERFORMING LOANS 5,201 4,550 3,977
Other real estate owned 796 886 936
------ ------ ------
TOTAL NONPERFORMING ASSETS $5,997 $5,436 $4,913
====== ====== ======
RATIOS:
Total nonperforming loans as % of total loans 1.53% 1.27% 1.08%
Nonperforming assets as % of total loans and
other real estate owned 1.76 1.52 1.33
Nonperforming assets as % of total assets 0.95 0.89 0.78
</TABLE>
Nonperforming assets totaled $5,997,000 or 0.95% of total assets at June
30, 1999 compared to $5,436,000 or 0.89% and $4,913,000 or 0.78% at December
31, 1998 and June 30, 1998, respectively. The increase in nonaccrual loans is
mainly the result of the addition of loans to one commercial borrower. The
borrower is currently in the process of liquidating assets to satisfy its
obligations, and while the Company expects to eventually receive the full
amount that is owed, sufficient reserves have been established should there be
a short-fall from the liquidation of the collateral securing the loans. The
decrease in loans past due 90 days or more and still accruing interest was due
to the renewal of several loans. Loans in this category are typically past due
because the loan has matured and the renewal has not been processed because it
is lacking some form of documentation. The loans are typically current as to
the payment of principal and interest. Fluctuations in the level of
nonperforming assets are a normal part of the Company's business, however,
management is cognizant of the need to continually ensure that nonperforming
assets remain at acceptably low levels.
Current standards require that a loan be reported as impaired when it is
probable that a creditor will be unable to collect all amounts due according to
the contractual terms of the loan agreement. The Company's loan policy
generally requires that a credit meeting the above criteria be placed on
nonaccrual status; however, loans which are past due more than 90 days as to
payment of principal or interest are also considered to be impaired. These
loans are included in the total of nonperforming assets. Loans past due less
than 90 days are generally not considered impaired; however, a loan which is
current as to payments may be determined by management to demonstrate some of
the characteristics of an impaired loan. In these cases, the loan is
classified as impaired while management evaluates the appropriate course of
action. The Company's primary basis for measurements of impaired loans is the
collateral underlying the identified loan.
12
<PAGE> 13
Item 2. (continued)
Any loans classified for regulatory purposes, but not included above in
nonperforming loans, do not represent material credits about which management
is aware of any information which causes management to have serious doubts as
to the borrower's ability to comply with the loan repayment terms or which
management reasonably expects will materially impact future operating results
or capital resources. As of June 30, 1999, there were no concentrations of
loans exceeding 10% of total loans, which were not disclosed as a category of
loans, detailed on page 11.
INVESTMENTS IN DEBT SECURITIES
Investments in debt securities have increased $38,013,000 since December
31, 1998 due to a second return on equity enhancement strategy employed by the
Company's lead bank. To utilize a portion of such bank's excess capital
capacity, the bank borrowed approximately $30,000,000 in FHLB advances to fund
the purchase of mortgage-backed securities. In 1998, the Company implemented a
similar $10 million strategy. The remainder of the increase can be attributed
to the decrease in loans. Overall, the investment portfolio contains a diverse
mixture of debt securities in terms of the types of securities, interest rates,
and maturity distribution, which is beneficial to the Company when reacting to
changes in the interest rate environment.
DEPOSITS
Total deposits decreased $6,194,000 during the six months of 1999 as a
result of a decrease in time deposits. Time deposits decreased by more than
$17,000,000 during the first half of 1999, but were partially offset by
approximately $11,200,000 in growth of interest-bearing demand and savings
deposits. Competition for time deposits remains intense, as start-up banks, as
well as established institutions, fight for market share. While the Company is
careful to retain its core-deposit base, management is less aggressive with
respect to time deposit pricing than some of its competitors. The growth in
interest-bearing demand and savings deposits is due, in part, to management's
focus on attracting and retaining these deposits, as well as the customers
desire to keep more funds liquid during periods of low interest rates.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase (REPOs) declined $598,000
during the first six months of 1999, due to normal daily fluctuations in the
balances of the underlying accounts. The majority of the Company's REPOs are
used by larger commercial customers as a daily cash management tool, therefore,
depending on their individual liquidity positions, the balances in these
accounts can vary considerably.
FHLB BORROWINGS
The $29,918,000 increase in FHLB borrowings was due to $30,000,000 in FHLB
borrowings obtained as part of the aforementioned return on equity enhancement
strategy.
ASSET/LIABILITY MANAGEMENT
As reflected on the Repricing and Interest Rate Sensitivity Analysis
below, the Company has a reasonably well balanced interest rate sensitivity
position. The Company's current one-year cumulative gap is 1.04x. Generally,
a one-year cumulative gap ratio in a range of 0.80x - 1.20x indicates an entity
is not subject to undue interest rate risk. A one-year cumulative gap ratio of
1.00x indicates that an institution has an equal amount of assets and
liabilities repricing within twelve months. A ratio in excess of 1.00x
indicates more assets than liabilities will be repriced during the period
indicated, and a ratio less than 1.00x indicates more liabilities than assets
will be repriced during the period indicated. However, actual experience may
differ because of the assumptions used in the allocation of deposits and other
factors, which are beyond management's control. Additionally, the following
analysis includes the available-for-sale securities spread throughout their
respective repricing and/or maturity horizons, even though such securities are
available for immediate liquidity should the need arise in any particular time
horizon.
13
<PAGE> 14
Item 2. (continued)
REPRICING AND INTEREST RATE SENSITIVITY ANALYSIS
(dollars in thousands)
JUNE 30, 1999
<TABLE>
<CAPTION>
Over Over
3 months 1 year
3 months through through Over
or less 12 months 5 years 5 years Total
-------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold $ 25,150 $ - $ - $ - $ 25,150
Investments available-for-sale 20,378 18,309 55,481 52,997 147,165
Investments held-to-maturity 7,488 14,800 30,943 19,548 72,779
Loans, net of unearned discount (1) 185,960 39,247 79,643 35,796 340,646
-------- -------- -------- -------- --------
Total interest-earning assets 238,976 72,356 166,067 108,341 585,740
-------- -------- -------- -------- --------
Cumulative interest-earning assets 238,976 311,332 477,399 585,740 585,740
-------- -------- -------- -------- --------
Interest-bearing liabilities:
Interest-bearing demand deposits 53,638 30,650 38,312 30,650 153,250
Savings deposits 23,121 13,212 16,515 13,212 66,060
Time deposits under $100,000 46,203 81,409 57,810 - 185,422
Time deposits $100,000 and over 20,616 18,729 3,205 - 42,550
Securities sold under agreements to
repurchase 2,351 - - - 2,351
FHLB borrowings - 10,000 34,205 - 44,205
-------- -------- -------- -------- --------
Total interest-bearing liabilities 145,929 154,000 150,047 43,862 493,838
-------- -------- -------- -------- --------
Cumulative interest-bearing liabilities 145,929 299,929 449,976 493,838 493,838
-------- -------- -------- -------- --------
Gap analysis:
Interest sensitivity gap $ 93,047 $(81,644) $ 16,020 $ 64,479 $ 91,902
======== ======== ======== ======== ========
Cumulative interest
sensitivity gap $ 93,047 $ 11,403 $ 27,423 $ 91,902 $ 91,902
======== ======== ======== ======== ========
Cumulative gap ratio of interest-
earning assets to interest-bearing
liabilities 1.64x 1.04x 1.06x 1.19x 1.19x
===== ===== ===== ===== =====
</TABLE>
(1) Nonaccrual loans are reported in the "Over 1 year through 5 years" column.
14
<PAGE> 15
Item 2. (continued)
CAPITAL RESOURCES
The regulatory capital guidelines require banking organizations to
maintain a minimum total capital ratio of 8% of risk-weighted assets (of which
at least 4% must be Tier I capital). The Company's total capital ratios under
the risk-weighted guidelines were 18.20%, 17.41% and 17.12% as of June 30,
1999, December 31, 1998, and June 30, 1998, respectively, which included Tier I
capital ratios of 16.94%, 16.15%, and 15.86%, respectively. These ratios are
well above the minimum risk-weighted capital requirements.
In addition, the Company and its subsidiary banks must maintain a minimum
Tier I leverage ratio (Tier I capital to total adjusted consolidated assets) of
at least 3%. Capital, as defined under these guidelines, is total
shareholders' equity less goodwill and excluding unrealized gains and losses on
available-for-sale securities of the Company. The Company's Tier I leverage
ratios were 9.75%, 10.01%, and 10.92% at June 30, 1999, December 31, 1998, and
June 30, 1998, respectively.
RESULTS OF OPERATIONS
EARNINGS SUMMARY
Net income was $3,030,000 for the six months ended June 30, 1999 compared
to $3,360,000 for the six months ended June 30, 1998, which represents a
$330,000 or a 10% decrease over the prior year. In addition, second quarter
net income was $1,428,000 compared to $1,722,000 in the prior year. Both of
the decreases were the result of a combination of factors. Increases in net
interest and noninterest income attributable to the acquisition of Public
Service Bank, FSB (PBS) on June 29, 1998, were more than offset by increases in
personnel, occupancy, data processing and other expenses. The increases in
noninterest expense were largely due to the addition of the two PSB facilities,
PSB's secondary-market mortgage loan department, a new facility opened by South
Side National Bank in St. Louis in January, a new facility opened by the State
Bank of Jefferson County in May, and continued costs associated with Y2K
testing and preparedness. Management anticipates that ongoing Y2K expenses
will not be significant, and that start-up costs associated with the new
facilities should not continue into future quarters. However, as with any
expansion effort, the Company will continue to face downward pressure on
earnings until growth at these new branches provides a sufficient deposit base
to offset the overhead expense at these locations. While having a slightly
negative affect in the short-term, we believe these expansion efforts will
provide solid long-term financial results for the Company.
Net income for the first six months of 1999 resulted in an annualized
return on average assets (ROA) of 0.97% compared to 1.21% in the prior year,
and an annualized return on average shareholders' equity (ROE) of 9.29%
compared to 11.64% in the prior year. ROE continues to be negatively impacted
by the Company's strong equity position, and was a major factor in the
Company's decision to implement the $30 million return on equity enhancement
strategy. Diluted earnings per common share were $0.35 for the first six
months of 1999 compared to $0.40 for the first six months of 1998.
NET INTEREST INCOME
As reflected in the Selected Statistical Information table on the
following page, net interest income on a tax-equivalent basis increased by
$559,000 in the first six months of 1999 when compared to the first six months
of 1998. The increase in net interest income was due in part to the
acquisition of PSB, as well as the $30 million leverage strategy employed
during the first quarter of 1999, however, both of these factors were offset by
a decrease in the Company's net interest margin on average interest-earning
assets. Average interest-earning assets increased by $58,403,000 from the
prior year, but the average yield on those assets declined by 47 basis points
from 7.88% in 1998 to 7.41% in 1999. The major factor in this decline has been
a 50 basis point decrease in the yield on loans. Competition for loans in the
Company's markets continues to be very strong, consequently loans are being
priced with lower yields in order to attract and retain borrowing
relationships. The Company's cost of funds also decreased from 1998 to 1999,
although the 30 basis point drop was not sufficient to offset the decrease in
loan yields. Because the Company's loan to deposit ratio is below its
competitors, it has been less aggressive in its deposit pricing, which explains
the decrease in the cost of funds.
15
<PAGE> 16
Item 2. (continued)
SELECTED STATISTICAL INFORMATION
THE FOLLOWING IS SELECTED STATISTICAL INFORMATION FOR SOUTHSIDE BANCSHARES
CORP. AND SUBSIDIARIES.
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET AND AVERAGE INTEREST RATES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------------------------
1999 1998
---------------------------- ----------------------------
AVERAGE Average
INTEREST RATES Interest Rates
AVERAGE INCOME\ EARNED\ Average Income\ Earned\
BALANCE EXPENSE PAID(3) Balance Expense Paid(3)
------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned discount (1) (2) (3) $348,370 $14,604 8.38% $323,863 $14,380 8.88%
Investments in debt securities:
Taxable(4) 169,896 4,981 5.86 151,008 4,504 5.97
Exempt from Federal income tax (3) (4) 32,068 1,241 7.74 25,745 1,055 8.19
Short-term investments 30,800 711 4.62 22,115 592 5.35
-------- ------- -------- -------
Total interest-earning assets/interest
income/overall yield (3) 581,134 21,537 7.41 522,731 20,531 7.88
------- ==== ------- ====
Allowance for possible loan losses (6,214) (6,081)
Cash and due from banks 17,686 15,551
Other assets 32,069 21,165
-------- --------
TOTAL ASSETS $624,675 $553,366
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand and savings deposits $217,066 3,023 2.79% $199,330 3,140 3.15%
Time deposits 237,132 5,900 4.98 224,721 5,989 5.33
Short-term borrowings 2,902 61 4.20 4,632 102 4.40
Other borrowings 29,501 787 5.34 3,099 93 6.00
-------- ------- -------- -------
Total interest-bearing liabilities/interest-
expense/overall rate 486,601 9,771 4.02 431,782 9,324 4.32
------- ==== ------- ====
Non-interest-bearing demand deposits 66,210 59,358
Other liabilities 6,598 4,490
Shareholders' equity 65,266 57,736
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $624,675 $553,366
======== ========
NET INTEREST INCOME $11,766 $11,207
======= =======
NET INTEREST MARGIN ON AVERAGE INTEREST-EARNING
ASSETS 4.05% 4.29%
==== ====
</TABLE>
(1) Interest income includes loan origination fees.
(2) Average balance includes nonaccrual loans.
(3) Interest yields are presented on a tax-equivalent basis.
(4) Includes investments available-for-sale.
16
<PAGE> 17
Item 2. (continued)
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses remained at a relatively low level
of $30,000 during the first six months of 1999. Based on the Company's
analysis of the adequacy of the allowance for possible loan losses, management
determined it was not necessary to record significant provisions for possible
loan losses. Management will continue to assess the adequacy of the allowance
for possible loan losses on a regular basis throughout the year.
NONINTEREST INCOME
Noninterest income increased $240,000 during the first six months of 1999
in comparison to the six months of the prior year, and increased $53,000 over
the second quarter of 1998. Trust department income increased in both the
first and second quarter of 1999 when compared to 1998. These increases were
largely due to growth in this area over the past year, which resulted from
mergers and consolidations in the banking industry. This activity has prompted
many trust customers to seek out more personalized trust services, like those
offered by the Company's trust department. Service charges increased due to
the additional accounts acquired in the PSB acquisition. The increase in gains
on sales of loans can also be attributed to the PSB acquisition. The
secondary-market mortgage loan operation of PSB was an important part of the
Company's decision to purchase the entity, and while revenues have increased
from the prior year, they have not met the Company's projections. Management
is currently evaluating this area and will be making some necessary adjustments
during the remainder of 1999 to ensure this area meets the Company's
profitability objectives next year and beyond. The decrease in other income
was mainly due to gains on sales of other real estate owned (OREO) in 1998,
versus small losses on the disposition of OREO in 1999.
NONINTEREST EXPENSE
Noninterest expense for the first six months of 1999 increased $1,418,000
when compared to the first six months of the prior year, and $838,000 in the
second quarter of 1999 compared to the second quarter of 1998. Salaries and
employee benefits increased by $545,000 for the year and $321,000 for the
quarter. The bulk of the increase was due to the additional personnel acquired
in the PSB acquisition, as well as, the employees hired to staff the two new
branches opened during 1999. The remainder of the increase can be attributed
to normal pay increases and increased labor costs associated with the areas
tight labor market. Net occupancy and equipment expense increased by $263,000
for the year and $158,000 for the quarter. The Company operated four more
branches during the first half of 1999 compared to 1998, which was responsible
for the increase in occupancy expense. The increase in data processing expense
was partially due to the Company's local area and wide area networks being
upgraded, in part to ensure Y2K compliance, and to improve operating
efficiency. There were also start-up and duplicate expenses incurred during
the first half of 1999, as the Company moved their network operations center,
which required running parallel systems to ensure minimal disruption when the
switchover occurred. Finally, the expense for the first half of 1999 contained
additional expense associated with Y2K testing and preparedness. The increase
in other noninterest expense was caused by goodwill amortization associated
with PSB acquisition, as well as, increased costs for supplies,
telecommunications, insurance, postage, and other expenses related to the
operation of four additional branches.
INCOME TAXES
Federal income tax expense for the first six months of 1999 was $1,099,000
compared to $1,288,000 in the first six months of 1998. The Company's
effective tax rate decreased to 26.62% for the first six months of 1999,
compared to 27.71% for the first six months of 1998. This decrease was due to
the net effect of an increase in tax exempt income and additional low-income
housing tax credits, which were partially offset by an increase in goodwill
amortization, which is a nondeductible expense for tax purposes.
17
<PAGE> 18
Item 2. (continued)
EFFECT OF NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities, which was issued in June 1998,
establishes accounting and reporting standards for derivative instruments and
hedging activities. Under SFAS 133, derivatives are recognized on the balance
sheet at fair value as an asset or liability. Changes in the fair value of
derivatives are reported as a component of other comprehensive income or
recognized as earnings through the income statement depending on the nature of
the instrument. In June 1999, the FASB issued SFAS 137- Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, an Amendment of FASB Statement No. 133, which defers
the effective date of SFAS 133 from fiscal years beginning after June 15, 1999
to fiscal years beginning after June 15, 2000. Initial application should be
as of the beginning of an entity's fiscal quarter; on that date, hedging
relationships must be designated and documented pursuant to the provisions of
SFAS 133, as amended. Earlier application of all of the provisions is
encouraged but is permitted only as of the beginning of any fiscal quarter that
begins after the issuance date of SFAS 133, as amended. Additionally, SFAS
133, as amended should not be applied retroactively to financial statements of
prior periods. The Company is currently evaluating the requirements of SFAS
133, as amended, to determine its potential impact on the consolidated
financial statements.
THE YEAR 2000 ISSUE
The Year 2000 issue relates to computer programs and systems that have
used a two-digit field rather than a four-digit field to represent the year.
Therefore, these programs do not properly recognize a year that begins with
"20" instead of "19". The risk of a system failure and data processing errors
may be the result of this programming logic. Management has implemented a
company-wide initiative for preparing its systems, applications and equipment
for functionality in the Year 2000 and beyond. The Company's Year 2000 project
consists of five phases including awareness, assessment, renovation, testing
and implementation, all of which are well underway.
The Company continues to monitor efforts to ready internal systems for the
Year 2000. Highest priority has been assigned to those systems determined to
be critical to the ongoing operations of the Company. Programming changes and
testing of critical systems, applications, and equipment are substantially
complete, and management presently believes that the Year 2000 issue will not
pose a substantial internal operating risk to the Company.
The Company modified its credit risk assessment to include the
consideration of incremental risk that may be posed by customer's inability, if
any, to address Year 2000 issues. Management presently believes this risk to
be manageable, and continues to monitor customer's efforts to prepare for the
Year 2000. Additionally, the Company has implemented a process for assessing
the readiness of its major vendors, suppliers and business partners. There can
be no guarantee, however, that the systems of these outside parties will be
remediated on a timely basis or that a failure to remediate by one of these
parties would not have a material adverse effect on the Company.
The risk of the system failures, either internal or external, cannot be
completely eliminated. The Company feels that it has assessed the worst case
scenario that can be caused by the oncoming Year 2000 and has adequately
addressed the possible effect thereof. The Company has assessed the types and
nature of contingency plans that will be required to maintain the Company's
operational capacity after January 1, 2000. Contingency plans cover all
critical areas of the Company, as well as customers, suppliers and business
partners.
To date, the Company and its subsidiaries have incurred approximately
$340,000 in direct costs associated with Year 2000 readiness efforts, of which
$90,000 relates to 1999. The Company estimates that total expenditures will
approximate $350,000 through the Year 2000. This includes external costs that
will be expensed, as well as new hardware and software totaling approximately
$250,000, which will be capitalized. Funding for costs associated with Year
2000 efforts will be derived from normal operating cash flow. As a result,
Year 2000 expenses are not expected to a have a material effect on the
Company's results of operations.
18
<PAGE> 19
Item 2. (continued)
The foregoing discussion of Year 2000 issues is based on management's most
current estimates. These estimates utilize multiple assumptions of future
events, including, but not limited to, the continued availability of certain
resources, third party efforts, and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual costs and results
could differ materially from the estimates currently anticipated by the
Company.
COMMON STOCK - MARKET PRICE AND DIVIDENDS
The table below sets forth the high, low and closing bid prices of the
Company's common stock for the periods presented. The Company's common stock is
traded on the National Association of Securities Dealers Automated Quotation
System/Small-Cap Market System ("NASDAQ/SCM") under the symbol SBCO.
Accordingly, information included below represents the high and low bid prices
of the common stock reported on NASDAQ/SCM.
<TABLE>
<CAPTION>
Book Dividends Paid Per
High Bid Low Bid Close Value Market/Book Common Share
-------- ------- ----- ----- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
2ND QUARTER - 1999 $11.625 $10.00 $11.3125 $7.63 148.26% 0.080
1st Quarter - 1999 13.00 10.75 11.625 7.76 149.81 0.080
4th Quarter - 1998 15.00 11.75 12.25 7.70 159.09 0.080
3rd Quarter - 1998 13.00 11.17 12.375 7.63 162.19 0.073
2nd Quarter - 1998 14.92 12.08 12.08 7.48 161.50 0.070
1st Quarter - 1998 12.58 11.42 12.58 7.11 176.93 0.067
</TABLE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, the Company had certain routine lawsuits
pending at June 30, 1999. In the opinion of management, after consultation
with legal counsel, none of these lawsuits will have a material adverse effect
on the consolidated financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's regular Annual Meeting of Shareholders was held on April 22,
1999. Proxies for the meeting were solicited pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended.
At the meeting, shareholders (i) elected three Class I Directors, each to
serve for a term of three years, and (ii) ratified the appointment by the Board
of Directors of KPMG LLP as the firm of independent certified public accountants
to audit the accounts of the Company for the fiscal year ended December 31,
1999.
Management's Director nominees were: Norville K. McClain, Richard G.
Schroeder, Sr. and Thomas M. Teschner.
The Directors elected at the meeting were: Norville K. McClain, Richard G.
Schroeder, Sr. and Thomas M. Teschner. The names of each of the Directors whose
term of office as a Director continued after the meeting is as follows: Joseph
W. Beetz (term expiring 2000); Howard F. Etling (term expiring 2000); Douglas P.
Helein (term expiring 2001); Earle J. Kennedy, Jr. (term expiring 2001); and
Daniel J. Queen (term expiring 2001);
19
<PAGE> 20
The following is a tabulation of voting for Directors:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted Voted Voted
Nominee For Against Withheld
- --------------- ---------- --------- ---------
<S> <C> <C> <C>
Norville K. McClain 6,209,646 3,537 10,265
Richard G. Schroeder, Sr. 6,213,183 - 10,265
Thomas M. Teschner 6,209,646 3,537 10,265
</TABLE>
With respect to the ratification of the appointment of KPMG LLP, there
were 6,214,311 shares voted "For" and 618 shares voted "Against", with 8,519
shares abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit
Number Exhibit
------- -------
3(b) Restated Bylaws of the Registrant with amendments
through July 1, 1999.
10(c) Deferred Compensation
Agreement, dated April 25, 1996, between Thomas M.
Teschner and Southside Bancshares Corp., as
amended.
(B) REPORTS ON FORM 8-K
NONE.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHSIDE BANCSHARES CORP.
--------------------------------------
August 13, 1999 /s/ Thomas M. Teschner
-------------------------------------
Thomas M. Teschner
President
(Principal Executive Officer)
August 13, 1999 /s/ Joseph W. Pope
-------------------------------------
Joseph W. Pope
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer, Controller, and Principal
Accounting Officer)
21
<PAGE> 22
Form 10-Q
Index to Exhibits
Exhibit
3(b) Restated Bylaws of the Registrant with amendments through July 1, 1999.
10(c) Deferred Compensation Agreement, dated April 25, 1996, between Thomas M.
Teschner and Southside Bancshares Corp., as amended.
<PAGE> 1
Exhibit 3(b)
RESTATED BYLAWS
OF
SOUTHSIDE BANCSHARES CORP.
(A Missouri Corporation)
Dated February 24, 1994
INDEX
<TABLE>
<S> <C>
ARTICLE I Offices and Records
ARTICLE II Seal
ARTICLE III Shareholders Meetings
ARTICLE IV Directors
ARTICLE V Officers
ARTICLE VI Share of Stock
ARTICLE VII Indemnification
ARTICLE VIII General
</TABLE>
<PAGE> 2
I. OFFICES AND RECORDS
Registered Office and Registered Agent. The location of the registered
office and the name of the registered agent of the Corporation in the State of
Missouri shall be determined from time to time by the Board of Directors and
shall be on file in the appropriate office of the State of Missouri pursuant to
applicable provisions of law.
Corporate Offices. The Corporation may have such corporate offices,
anywhere within and without the State of Missouri as the Board of Directors
from time to time may appoint, or the business of the Corporation may require.
The "principal place of business" or "principal business" or "executive" office
or offices of the Corporation may be fixed and so designated from time to time
by the Board of Directors, but the location or residence of the Corporation in
Missouri shall be deemed for all purposes to be in the city or county in which
its registered office in Missouri is maintained.
Records. The Corporation shall keep at its registered office, or
principal place of business, in Missouri, original or duplicate books in which
shall be recorded the number of its shares subscribed, the names of the owners
of its shares, the numbers owned of record by them respectively, the amount of
shares paid, and by whom, the transfer of said shares with the date of
transfer, the amount of assets and liabilities, and the names and places of
residence of its Officers, and from time to time such other or additional
records, statements, lists, and information as may be required by law,
including the Shareholders' lists mentioned in these Bylaws.
Inspection of Records. A Shareholder, if he is entitled and demands to
inspect the records of the Corporation pursuant to any statutory or other legal
right, shall be privileged to inspect such records only during the usual and
customary hours of business and in such manner as will not unduly interfere
with the regular conduct of the business of the Corporation. A Shareholder may
delegate his right of inspection to his representative on the condition that,
if the representative is not an attorney, the Shareholder and representative
agree with the Corporation to furnish to the Corporation, promptly as completed
or made, a true and correct copy of each report with respect to such inspection
made by such representative. No Shareholder shall use or permit to be used or
acquiesce in the use by others of any information so obtained, to the detriment
competitively of the Corporation, nor shall he furnish or permit to be
furnished any information so obtained to any competitor or prospective
competitor of the Corporation. The Corporation as a condition precedent to any
Shareholder's inspection of the records of the Corporation may require the
Shareholder to indemnify the Corporation against any loss or damage which may
be suffered by it arising out of or resulting from any unauthorized disclosure
made or permitted to be made by such Shareholder of information obtained in the
course of such inspection.
II. SEAL
Corporate Seal. The corporate seal shall have inscribed thereon the name
of the Corporation and the words: Corporate Seal Missouri. Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
<PAGE> 3
III. SHAREHOLDERS MEETINGS
Place Of Meeting. Any annual meeting or special meeting of the
Shareholders of the Corporation is to held at such place within or without the
State of Missouri as may be designated by the Board of Directors or executive
committee of the Corporation. If there is a failure to designate a place for
such meetings, the same is to be held at the principal place of business of the
Corporation.
Annual Meetings. The annual meeting of the Corporation's Shareholders is
to be held at 2:00 p.m. on the fourth Thursday of the month of April of each
year, immediately following the end of each tax year, if not a legal holiday,
and if a legal holiday, then on the next business day following such date, for
the purpose of electing Directors and for the transaction of such other
business as may properly come before the meeting.
Special Meetings. Special meetings of the Shareholders will be called by
the Secretary upon request of the President or a majority of the members of the
Board of Directors or upon the written request of the holders of not less than
eighty percent (80%) of all the outstanding shares of the Corporation's stock
entitled to vote at such meeting. Notwithstanding the provisions of any
Articles of the Articles of Incorporation or any other Article herein, this
section of the Bylaws may not be amended or repealed without the consent of the
holders of eighty percent (80%) of the outstanding shares of the Corporation.
Action in Lieu of Meeting. Actions shall be taken by the Shareholders
only at annual or special meetings of Shareholders, and Shareholders may not
act by written consent. This Section of the Bylaws may not be altered, amended
or repealed except by an affirmative vote of at least eighty percent (80%) of
the total number of Directors or by eighty percent (80%) of the Shareholders of
the Corporation, as provided by the Articles of Incorporation.
Notice. Written notice of each meeting of the Shareholders, whether
annual or special, stating the place, day and hour of the meeting, and in case
of special meeting the purpose or purposes thereof, shall be delivered or given
to each Shareholder entitled to vote thereat, not less than ten days nor more
than fifty days prior to the meeting.
Any notice of a Shareholders' meeting sent by mail shall be deemed to be
delivered when deposited in the United States Mail with postage thereon prepaid
addressed to the Shareholder at his address as it appears on the records of the
Corporation.
Waiver of Notice. Whenever any notice is required to be given under the
provisions of these Bylaws, or the Articles of Incorporation of the Corporation
or any law, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time states therein, shall
be deemed the equivalent to the giving of such notice.
To the extent provided by law, attendance at any meeting shall constitute
a waiver of notice of such meeting.
Business Transacted at Annual and Special Meetings. At each annual
meeting of Shareholders, the Shareholders shall elect Directors and transact
such other business as shall properly come before the meeting. Business
transacted at all special meetings shall be confined to the purposes stated in
the notice
<PAGE> 4
of such meetings. In order for any nomination for Director to be entertained
at any meeting or for any business to be transacted at any annual meeting of
the Shareholders, other than nominations or business made or proposed by or at
the direction of the Board of Directors, notice thereof must be received from
the nominating or proposing Shareholder by the Secretary of the Corporation,
accompanied or promptly followed by such supporting information as the
Secretary shall reasonably request, not less than seventy-five days prior to
the date of any annual meeting or more than seven days after the mailing of
notice of any special meeting.
Quorum. Except as may be otherwise provided by law or by the Articles of
Incorporation, the holders of a majority of the voting shares issued and
outstanding, and entitled to vote thereat, present in person or by proxy, shall
be requisite for and shall constitute a quorum, at all meetings of the
Shareholders, for the transaction of business. If, however, such quorum should
not be present at any meeting, the Shareholders present and entitled to vote
shall have power successively to adjourn the meeting, without notice other than
announcement at the meeting, to a specified date not longer than ninety days
after such adjournment. At such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally notified.
Voting. Each Shareholder shall be entitled to vote in person or by proxy
and shall have one vote for each share of stock entitled to vote under the
provisions of the Articles of Incorporation which is registered in his or her
name on the books of the Corporation. Cumulative voting for the election of
Directors is denied.
If the Board of Directors shall not have closed the transfer books of the
Corporation or set a record date for the determination of its Shareholders
entitled to vote, as otherwise provided in these Bylaws, no person shall be
admitted to vote directly or by proxy except those in whose names the shares of
the Corporation shall have stood on the transfer books on a date fifty days
previous to the date of the meeting.
Removal of Directors. At a meeting called expressly for that purpose, a
Director of the Corporation or the entire Board of Directors of the Corporation
may be removed without cause only upon the affirmative vote of the holders of
not less than eighty percent (80%) of the shares entitled to vote generally in
the election of Directors; provided, however, that, if less than the entire
Board of Directors is to be so removed without cause, no one of the Directors
may be removed if the votes cast against such Director's removal would be
sufficient to elect such Director if then cumulatively voted at an election of
the Class of Directors of which such Director is a part. At a meeting called
expressly for that purpose, a Director may be removed by the Shareholders for
cause by the affirmative vote of the holders of majority of the shares entitled
to vote upon his election.
Inspectors. At each meeting of Shareholders where the object of the
meeting shall be to elect Directors or to take a vote of the Shareholders on
any proposition, the presiding Officer of the meeting shall appoint not less
than two persons, who are not Directors of this Corporation, inspectors to
receive and canvass the votes given at such meeting and certify the result to
him or her.
IV. DIRECTORS
Qualifications and Number. The business of the Corporation shall be
managed under the direction of its Board of Directors and each Director shall
be a natural person of full age. In order to be qualified for
<PAGE> 5
nomination for, and election to, the Corporation's Board of Directors, a person
must own a minimum of 1,000 shares of common stock of the Corporation. For
purposes of this paragraph, the requisite number of shares may be owned (i) by
the Director in his own name; (ii) by the Director's spouse (whether in his or
her own name or jointly with the Director); (iii) by any trust for which the
Director is the trustee or co-trustee and also the grantor or the sole
beneficiary; (iv) by a custodian or broker for the account of either the
Director, the Director's spouse or a trust described in (iii), above; or (v) by
the Director's minor child, provided such shares were given to the child by the
Director or the Director's spouse in accordance with the Uniform Gift to Minors
Act.
The number of Directors which shall constitute the whole Board shall be
fixed, from time to time, by resolutions adopted by the Board, but shall not be
less than nine (9) persons nor more than fifteen (15). The Board shall be
divided into three classes as nearly equal in number as possible whose term
expire at different times. When the initial Board is elected, two (2)
Directors shall be elected for a term of one (1) year; two (2) Directors for a
term of two (2) years; and three (3) Directors for a term of three (3) years.
At each subsequent annual Shareholders, meeting, successors to the class of
Directors whose term expire that year shall be elected to hold office for a
term of three (3) years. Notwithstanding the provisions of any other Article
herein, this section of the Bylaws may not be amended or repealed without the
consent of the holders of eighty percent (80%) of the outstanding shares of the
Corporation.
Classes, Election and Term. The Board of Directors shall be and is
divided into three classes, Class I, Class II and Class III, which shall be as
nearly equal in number as possible. At each annual meeting, the Shareholders
shall elect by ballot the members of the Board of Directors. Each person
appointed or elected as a Director shall hold office until the annual meeting
of the Shareholders at which his or her term expires or until his or her
successor shall have been elected by the Shareholders, unless he shall have
been removed by the Shareholders. Each Director elected thereafter shall hold
office for a term of years as specified for his or her class and after three
years all Directors will be elected for terms of three (3) years and thereafter
until his or her successor shall have been elected and qualify, unless he shall
be removed by action of the Shareholders. Whenever any vacancy on the Board of
Directors shall occur due to death, resignation, retirement, removal, or
resulting from an increase in the authorized number of Directors, or otherwise,
a majority of the remaining Directors then in office, although less than a
majority of the entire Board of Directors, may fill the vacancy or vacancies so
created until a successor or successors shall be duly elected by the
Shareholders and shall qualify. The Board of Directors may apportion any
increase or decrease in Directorships among the classes as nearly equal in
number as possible. Notwithstanding the provision of any other Article herein,
only the remaining Directors of the Corporation shall have the authority, in
accordance with the procedure stated above, to fill any vacancy which exists on
the Board of Directors.
Powers of the Board. The property and business of the Corporation shall
be managed by the Directors, acting as a Board. The Board shall have and is
vested with all and unlimited powers and authorities, except as may be
expressly limited by law, the Articles of Incorporation or by these Bylaws, to
do or cause to be done any and all lawful things for and in behalf of the
Corporation, to exercise or cause to be exercised any or all of its powers,
privileges and franchises, and to seek the effectuation of its objects and
purposes.
Meetings of the Newly Elected Board--Notice. The members of each newly
elected Board shall meet (i) at such time and place, either within or without
the state of Missouri, as shall be suggested or
<PAGE> 6
provided for by resolution of the Shareholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected Directors in
order legally to constitute the meeting, provided a quorum shall be present, or
(ii) if not so suggested or provided for by resolution of the Shareholders or
if a quorum shall not be present, the members of such Board may meet at such
time and place as shall be consented to in writing by a majority of the newly
elected Directors, provided that written or printed notice of such meeting
shall be mailed, sent by telegram or delivered to each of the same Directors in
the same manner as provided in these Bylaws with respect to the giving of
notice for special meetings of the Board except that it shall not be necessary
to state the purpose of the meeting in such notice, or (iii) regardless of
whether or not the time and place of such meeting shall be suggested or
provided for by resolution of the Shareholders at the annual meeting, the
members of such Board may meet at such time and place as shall be consented to
in writing by all of the newly elected Directors. Each Director, upon his
election, shall qualify by accepting the office of Director, and his attendance
at, or his written approval of the minutes of, any meeting of the newly elected
Directors shall constitute his acceptance of such office; or he may execute
such acceptance by a separate writing, which shall be placed in the minute
book.
Regular Meetings--Notice. Regular meetings of the Board may be held
without notice at such times and places either within or without the State of
Missouri as shall from time to time be fixed by resolution adopted by the full
Board of Directors. Any business may be transacted at a regular meeting.
Special Meetings--Notice. Special meetings of the Board may be called at
any time by the Chairman of the Board or the President, or by any three or more
of the Directors. The place may be within or without the State of Missouri as
designated in the notice.
Written or printed notice of each special meeting of the Board, stating
the place, day and hour of the meeting and the purpose or purposes thereof,
shall be mailed to each Director at least three (3) days before the day on
which the meeting is to be held, or shall be sent to him by telegram, or be
delivered, at least two (2) days before the day on which the meeting is to be
held. If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail with postage thereon addressed to the Director at his
residence or usual place of business. If notice be given by telegraph, such
notice shall be deemed to be delivered when the same is delivered to the
telegraph company.
Action in Lieu of Meeting. Any action required or permitted to be taken
at a meeting of the Board of Directors may be taken without a meeting if a
consent in writing setting forth the action so taken shall be signed by all the
Directors entitled to vote with respect to the subject matter thereof. Any
such consent signed by all the Directors shall have the same effect as a
unanimous vote and may be stated as such in any document describing the action
taken by the Board of Directors.
Meeting by Conference Telephone or Similar Communications Equipment.
Members of the Board of Directors of the Corporation or any committee
designated by such Board, may participate in a meeting of such Board or
committee by means of conference telephone or similar communications equipment
whereby all persons participating in the meeting can hear each other, and
participate in a meeting in such manner shall constitute presence in person at
such meeting.
Quorum. At all meetings of the Board a majority of the full Board of
Directors shall, unless a greater number as to any particular matter is
required by the Articles of Incorporation or these Bylaws, constitute a quorum
for the transaction of business, and the act of a majority of the Directors
present at any
<PAGE> 7
meeting at which there is a quorum, except as may be otherwise specifically
provided by statute, by the Articles of Incorporation, or by these Bylaws,
shall be the act of the Board of Directors.
Less than a quorum may adjourn a meeting successively until a quorum is
present, and no notice of adjournment shall be required.
Waiver. Any notice provided or required to be given to the Directors may
be waived by any of them, whether before, at, or after the time stated therein.
Attendance of a Director at any meeting shall constitute a waiver of
notice of such meeting except where he attends for the express purpose, and so
states at the opening of the meeting, of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
Vacancies. If the office of any Director becomes vacant by reason of
death or resignation, a majority of the survivors or remaining Directors may
fill the vacancy until a successor shall have been duly elected at a
Shareholders' meeting.
Executive Committee. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate an executive committee, such committee
to consist of two or more Directors of the Corporation. Said committee, to the
extent provided in said resolution, shall have and may exercise all of the
authority of the Board of Directors in the management of the Corporation.
The executive committee shall keep regular minutes of its proceedings and
the same shall be recorded in the minute book of the Corporation. The
Secretary or an Assistant Secretary of the Corporation may act as Secretary for
the committee if the committee so requests.
Compensation of Directors and Committee Members. Directors and members of
all committees shall not receive any stated salary for their services as such,
but by resolution of the Board, a fixed sum and expenses of attendance, if any,
may be allowed for attendance at each regular or special meeting of the Board
or committee; provided that nothing herein contained shall be construed to
preclude any Director or committee member from serving the Corporation in any
other capacity and receiving compensation therefor.
Protection of Director for Reliance on Corporate Records. No Director
shall be liable for dividends legally declared, distribution legally made to
Shareholders, or any other action taken in reliance in good faith upon
financial statements of the Corporation represented to him to be correct by the
president of the Corporation or the Officer having charge of the books of
account, or certified by an accountant to fairly represent the financial
condition of the Corporation; nor shall any such Director be liable for
determining in good faith the amount available for dividends or distributions
by considering the assets to be of their book values.
V. OFFICERS
Officers--Who Shall Constitute. The Officers of the Corporation shall be
a President and a Secretary, and the Corporation may have, as Officers, one or
more Vice Presidents, a Treasurer, one or more Assistant Secretaries and one or
more Assistant Treasurers. The Board shall elect or appoint a
<PAGE> 8
President and Secretary at its first meeting after each annual meeting of the
Shareholders. The Board then, or from time to time, may also elect or appoint
one or more other Officers as it shall deem advisable, but need not elect or
appoint any Officers other than a President and a Secretary.
An Officer need not be a Shareholder.
Any two or more of such offices may be held by the same person, except the
offices of President and Secretary.
Term of Office. Each Officer of the Corporation shall hold his office for
the term for which he was elected, or until he resigns or is removed by the
Board, whichever first occurs.
Removal. Any Officer or agent elected or appointed by the Board of
Directors may be removed or discharged by the Board whenever in its judgment
the best interests of the Corporation would be served thereby.
Salaries and Compensation. Salaries and compensation of all elected
Officers of the Corporation shall be fixed, increased or decreased by the Board
of Directors.
The President. The President shall be the chief executive Officer of the
Corporation. Except as otherwise provided for in these Bylaws, the President
shall preside at all meetings of the Shareholders and Directors. The president
shall have general and active management of the business of the Corporation and
shall carry into effect all directions and resolutions of the Board.
The president shall have such other or further duties and authority as may
be prescribed elsewhere in these Bylaws or as may be prescribed from time to
time by the Board of Directors.
Vice President. The Vice President shall, in the absence, disability or
inability to act of the President, perform the duties and exercise the powers
of the President, and shall perform such other duties as the Board of Directors
shall from time to time prescribe.
The Secretary. The Secretary shall attend all sessions of the Board and,
except as otherwise provided for in these Bylaws, all meetings of the
Shareholders, and shall record or cause to be recorded all votes taken and the
minutes of all proceedings in a minute book of the Corporation to be kept for
that purpose. The Secretary shall perform like duties for the executive and
other standing committees when requested by the Board or such committee to do
so.
The Secretary shall have the principal responsibility to give, or cause to
be given, notice of all meetings of the Shareholders and of the Board of
Directors, but this shall not lessen the authority of others to give such
notice as is authorized elsewhere in these Bylaws.
The Secretary shall see that all books, records, lists and information, or
duplicates required to be maintained at the registered or some office of the
Corporation in Missouri, or elsewhere, are so maintained.
<PAGE> 9
The Secretary shall keep in safe custody the seal of the Corporation, and
when duly authorized to do so, shall affix the same to any instrument requiring
it, and when so affixed, shall attest the same by his signature.
The Secretary shall perform such other duties and have such other
authority as may be prescribed elsewhere in these Bylaws or as may be
prescribed from time to time by the Board of Directors or the President, under
whose direct supervision the Secretary shall be.
The Treasurer. The Treasurer shall have the general duties, powers and
responsibilities of a Treasurer of a Corporation, and shall be the chief
financial and accounting Officer of the Corporation.
The Treasurer shall perform such other duties and shall have such other
responsibility and authority as may be prescribed from time to time by the
Board of Directors.
VI. SHARES OF STOCK
Certificate for Share of Stock. The certificates for shares of stock of
the Corporation shall be numbered, shall be in such form as may be prescribed
by the Board of Directors in conformity with law, and shall be entered in the
stock books of the Corporation as they are issued, and such entries shall show
the name and address of the person, firm, partnership, Corporation or
association to whom each certificate is issued. Each certificate shall have
printed, typed or written thereon the name of the person, firm, partnership,
Corporation or association to whom it is issued, and the number of shares
represented thereby and shall be signed by the President or a Vice President,
and the Secretary or an Assistant Secretary of the Corporation and sealed with
the seal of the Corporation, which seal may be facsimile, engraved or printed.
Lost or Destroyed Certificates. In case of the loss or destruction of any
certificate for shares of stock of the Corporation, upon due proof of the
registered owner thereof or his representatives, by affidavit of such loss or
otherwise, the President and Secretary may issue a duplicate certificate
(plainly marked "duplicate") in its place, upon the Corporation being fully
indemnified therefor.
Transfers of Shares, Transfer Agent. Transfers of shares of stock shall
be made on the stock record or transfer books of the Corporation only by the
person named in the stock certificate, or by his attorney lawfully constituted
in writing and upon surrender of the certificate therefor. The stock record
book and other transfer records shall be in the possession of the Secretary or
of a transfer agent under such arrangements and upon such terms and conditions
as the Board deems advisable.
Closing of Transfer Books. The Board of Directors shall have power to
close the stock transfer books of the Corporation for a period not exceeding
fifty days preceding the date of any meeting of the Shareholders, or the date
for payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares shall go into effect;
provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date not exceeding fifty
days preceding the date of any meeting of Shareholders, of the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of shares shall go into effect, as a
record date for the determination of the Shareholders entitled to notice of,
and to vote at, the meeting or any adjournment thereof, or entitled to receive
payment of the dividends, or
<PAGE> 10
entitled to the allotment of rights, or entitled to exercise the rights in
respect of the change, conversion or exchange of shares.
No Fractional Share Interests. The Corporation shall not issue fractions
of a share.
VII. INDEMNIFICATION
(1) Indemnification of Directors and Officers. The Corporation, except as
provided in paragraph (3), shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, including, without limitation, any action by or in the right of
the Corporation, by reason of the fact that he is or was a Director or Officer
of the Corporation, or is or was a Director or Officer of the Corporation who
is or was serving at the request of the Corporation as a Director, Officer,
agent, employee, partner, trustee of another Corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines, taxes and amounts paid in settlement, actually and
reasonably incurred by him in connection with such action, suit, or proceeding
if such person's conduct is not finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The right to indemnification
conferred in this paragraph shall be a contract right and shall include the
right to be paid by the Corporation expenses incurred in defending any actual
or threatened civil or criminal action, suit or proceeding in advance of the
final disposition of such action, suit or proceeding. Such right will be
conditioned upon receipt of an undertaking by or on behalf of the Director or
Officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this Article
VII.
(2) Indemnification of Others. The Corporation may indemnify any person
who is or was a party or is threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative, including, without limitation, any action by
or in the right of the Corporation, by reason of the fact that he is or was a
non-Officer employee or agent of the Corporation, or is or was a non-Officer
employee or agent of the Corporation who is or was serving at the request of
the Corporation as a Director, Officer, agent, employee, partner or trustee of
another Corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines, taxes and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if such person's conduct is
not finally adjudged to be knowingly fraudulent, deliberately dishonest or
willful misconduct. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of the action, suit, or proceeding as authorized by the Board of
Directors in the specific case upon receipt of an undertaking by or on behalf
of the non-Officer employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VII.
(3) Payment of Expenses. If a claim under paragraph (1) of this Article
is not paid in full by the Corporation within thirty days after a written claim
has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if
<PAGE> 11
any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under The General
Business and Corporation Law of Missouri for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its Shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in The General
Business and Corporation Law of Missouri, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its Shareholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(4) Indemnification Provided Hereby Not Exclusive. The indemnification
provided by this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under the Articles of
Incorporation or Bylaws or any agreement, vote of Shareholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a Director, Officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(5) Purchase of Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, Officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, Officer, employee, partner, trustee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article VII.
(6) Definition of "Corporation". For the purposes of this Article VII,
references to "the Corporation" include all constituent Corporations absorbed
in a consolidation or merger as well as the resulting or surviving Corporation
so that any person who is or was a Director, Officer, employee or agent of such
a constituent Corporation or is or was serving at the request of such
constituent Corporation as a Director, Officer, employee, partner, trustee or
agent of another Corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this
Article VII with respect to the resulting or surviving Corporation as he would
if he had served the resulting or surviving Corporation in the same capacity.
(7) Other Definitions. For purposes of this Article VII, the term "other
enterprise" shall include employee benefit plans; the term "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and the term "serving at the request of the Corporation" shall
include any service as a Director, Officer, employee, partner, trustee or agent
of the Corporation which imposes duties on, or involves services by, such
Director, Officer, employee, partner, trustee or agent of, or at the request of
the Corporation which imposes duties on, or involves services by, such
Director, Officer, employee, partner, trustee or agent with respect to an
employee benefit plan, its participants, or beneficiaries.
(8) Savings Clauses. In the event any provision of this Article VII shall
be held invalid by any court of competent jurisdiction, such holding shall not
invalidate any other provision of this Article VII and
<PAGE> 12
any other provisions of this Article VII shall be construed as if such invalid
provision had not been contained in this Article. In any event, the
Corporation shall indemnify any person who is or was a Director or Officer of
the Corporation, or who is or was a Director or Officer of the Corporation who
is or was serving at the request of the Corporation as a Director, Officer,
agent, employee, partner or trustee of another Corporation, partnership, joint
venture, trust or other enterprise, to the full extent permitted by Missouri
law as in effect from time to time.
VIII. GENERAL
Fiscal Year. The Board of Directors shall have the paramount power to
fix, and from time to time, to change, the fiscal year of the Corporation. In
the absence of action by the Board of Directors, however, the fiscal year of
the Corporation shall be determined and signified by the filing of the
Corporation's first federal income tax return, until such time, if any, as the
fiscal year shall be changed by the Board of Directors.
Amendments to Bylaws. The Bylaws, or any of them, or any additional or
supplementary bylaws, may be altered, amended or repealed, and new bylaws may
be adopted at any annual meeting of the Shareholders without notice, or at any
special meeting the notice of which shall set forth the terms of the proposed
bylaw or action to be taken on any bylaw, by a vote of the majority of the
shares represented in person or by proxy and entitled to vote at such annual or
special meeting, as the case may be, except as otherwise provided herein.
To the extent provided for in the Articles of Incorporation, the Board of
Directors shall also have the power to adopt new bylaws, and to amend, alter
and repeal these and any additional and supplementary bylaws, at any regular or
special meeting of the Board of Directors. Notice of any such action to be
taken on any bylaws need not be included in the call of said meeting.
<PAGE> 13
CERTIFICATE
I, the undersigned, hereby certify that I acted as Secretary of a meeting
of the Board of Directors of Southside Bancshares Corp. held on the 24th day of
February, 1994, at which the foregoing Bylaws were duly adopted as and for the
Bylaws of said Corporation, and hereby further certify that the foregoing
constitute the Bylaws of said Corporation.
Dated this 24th day of February, 1994.
/s/ Joanne M. Schneider
------------------------------
Joanne M. Schneider, Secretary
<PAGE> 14
SOUTHSIDE BANCSHARES CORP.
AMENDMENT TO BYLAWS
(DECEMBER 28, 1995 BOARD OF DIRECTORS MEETING)
WHEREAS, the Corporation has declared a 10 for 1 stock split of the
Corporation common stock to be effected as of February 15, 1996; and
WHEREAS, the Board of Directors of the Corporation deems it desirable and
in the best interest of the Corporation and its stockholders that the
Corporation amend the Bylaws of the Corporation to adjust the number of shares
of common stock that a director must own to qualify as a director of the
Corporation so as to adjust for the effects of said stock split.
NOW THEREFORE, BE IT RESOLVED, that effective as of February 15, 1996, the
paragraph captioned "Qualification and Number" set forth in the Article IV of
the first paragraph thereof and replacing said sentence with the following
sentence:
"In order to be qualified for nomination for, and election to the Corporation's
Board of Directors, a person must own a minimum of 10,000 shares of common
stock of the Corporation."
BE IT FURTHER RESOLVED, THAT THE APPROPRIATE OFFICERS OF THE Corporation be and
hereby are authorized and directed in the name and on behalf of the Corporation
to take all action which they deem necessary or advisable in order to effect
the foregoing resolution and, in connection therewith, to execute, acknowledge,
deliver and file all such documents and instruments as in their judgement shall
be necessary, proper or available in order fully to carry out the intent and to
accomplish the purposes of the foregoing resolution and that any and all such
actions taken by such officers of the Corporation with respect to the subject
matter of these resolutions be, and they hereby are, in all respects, approved,
ratified and confirmed.
SECRETARY'S CERTIFICATE
I, Joanne M. Schneider, do hereby certify that I am duly elected and
acting Secretary of Southside Bancshares Corp., a Missouri corporation (the
"Corporation"), and that the foregoing "Southside Bancshares Corp. Amendment to
Bylaws" was duly adopted by the Board of Directors of the Corporation at a
meeting of the Board on December 28, 1995.
IN WITNESS WHEREOF, the undersigned has executed this Certificate, this
28th day of December, 1995.
/s/ Joanne M. Schneider
------------------------------
Joanne M. Schneider, Secretary
<PAGE> 15
SOUTHSIDE BANCSHARES CORP.
AMENDMENT TO BYLAWS
(JUNE 24, 1999 BOARD OF DIRECTORS MEETING)
Effective as of July 1, 1999, the paragraph captioned "Qualification and
Number" set forth in the Article IV of the Bylaws of the Corporation was
amended to include an additional option for ownership to be described under
(vi) as follows:
"(vi) or by a qualified employee stock ownership plan for the benefit of the
Director."
<PAGE> 16
EXHIBIT 10 (C)
DEFERRED COMPENSATION AGREEMENT
This deferred compensation agreement ("Agreement") is made and entered
into this 25th day of April, 1996, by and between THOMAS M. TESCHNER
("Employee") and SOUTHSIDE BANCSHARES CORP., a Missouri Corporation
("Company").
RECITAL
Company desires to provide additional compensation to Employee in order to
offset certain limitations imposed upon Employee's participation in Company's
qualified deferred compensation plans from and after 1988.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained
and other good and valuable consideration (the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties by their execution
hereof), the parties agree as follows:
1. Performance Stock. The compensation to be awarded under this Agreement will
be in the form of grants of "Performance Stock," which will be credited to a
"Performance Stock Account" to be maintained for Employee's benefit. The
Performance Stock Account will be maintained solely for accounting purposes and
will neither require nor permit a segregation of any Company assets.
Performance stock may be issued in whole and/or fractional shares. Each share
of Performance Stock will be deemed to be equivalent in value to one share of
Company's common stock as herein specified. An award of Performance Stock
under this Agreement constitutes a potential right to receive payment and does
not confer any dividend rights, voting rights or any other rights of a
shareholder with respect to Company common stock.
2. Grant of Awards. As of the date of this Agreement, an initial grant of
6,518 shares of Performance Stock, having a value on the date of grant of
$104,288.00 is hereby credited to Employee's Performance Stock Account. For
each calendar year after 1995 during the term of this Agreement, Employee will
be granted (as of the last business day of each such year) such number of whole
and/or fractional shares of Performance Stock, at a deemed value of the bid
price of the Company's publicly traded common stock on the last trading day of
the Plan Year in the case of 2.a. and 2.b. and Sixteen Dollars ($16.00) per
share in the case of 2.c., as shall have a value equal to the sum of:
a. An amount determined by multiplying Employee's "Excess 401(k) Amount"
(defined below) by the sum of the highest federal and applicable state income
tax rates in effect for the year in question; plus
b. An amount equal to (i) the employer matching contribution percentage
under the KSOP for such year multiplied by Employee's gross annual compensation
(determined without regard to this Agreement), less (ii) the employer matching
contributions actually made to the KSOP for the benefit of Employee; plus
<PAGE> 17
c. An amount determined by (i) multiplying total Company discretionary
basic and optional contributions to the KSOP, plus forfeitures, by a fraction,
the numerator of which is Employee's gross annual compensation for such year
(determined without regard to this Agreement), and the denominator of which is
total compensation of all KSOP participants, less (ii) the amount actually
contributed to the KSOP by Company, plus forfeitures allocated, for the benefit
of Employee.
In the event Company hereafter elects to (i) alter, amend or terminate the
KSOP, or (ii) establish one or more new deferred compensation plans, the above
stated formula for determining annual grants may be amended in such manner as
Company, in its sole discretion, determines appropriate.
As used in paragraph 2.a., above, the term "Excess 401(k) Amount" means an
amount equal to (i) fifteen percent (15%) of Employee's gross annual
compensation for such year (determined without regard to this Agreement), less
(ii) the maximum permitted deferral through salary reduction contributions to
Company's Employee Stock Ownership Plan with 401(k) Provisions ("KSOP") for
such year.
In the event the common stock of the Company shall cease to be publicly
traded, the deemed value for purposes of 2.a. and 2.b. shall be the value of a
share of the common stock of the Company on the relevant date under the KSOP.
3. Right to Payment for Performance Stock.
a. Employee will be entitled to receive payment for all shares of
Performance Stock credited to the Performance Stock Account upon the earliest
to occur of the following events:
i. A "Change in Control" of Company (defined below);
ii. Employee's termination of employment or retirement from Company;
iii. Employee's death; or
iv. Employee's Total Disability (defined below).
b. A "Change in Control" has occurred if (i) one person, or more than one
person acting as a group, acquires ownership of capital stock of Company
resulting in such person(s) owning Company stock possessing more than 50
percent of the total fair market value or voting power of the stock of the
Company; (ii) substantially all of the assets of Company are sold; (iii)
Company merges or consolidates with any other corporation or other entity and
Company is not the surviving corporation of such merger or consolidation; or
(iv) the owners of a majority of shares of capital stock of Company terminate
the business of, or liquidate or dissolve, Company.
c. "Total Disability" means complete and permanent inability by reason of
illness or accident to perform Employee's duties. All determinations as to the
date and extent of disability shall be made by Company upon the basis of such
evidence as Company deems necessary and desirable.
<PAGE> 18
4. Form and Timing of Payment. Within thirty (30) days after Employee is
entitled to receive payment pursuant to paragraph 3.a hereof, Company will pay
Employee an amount equal to the value of all Performance Stock which has then
been credited to the Performance Stock Account. For purposes of determining
the amount of the payment each share of Performance Stock will be valued at the
midpoint between the bid and asked price of the Company's publicly traded
common stock as of the close of business on the date of payment, or if the
common stock is no longer publicly traded, at the value of a share of the
Company's common stock as set forth in the then most recent valuation of the
common stock of the Company for purposes of the KSOP. Payments shall be made
wholly in cash and the Employee may not receive common stock or any other
security of Company in lieu thereof. Upon payment, this Agreement shall
terminate.
5. Dilution and Other Adjustments. In the event of any change in the
outstanding shares of common stock of Company by reason of any stock dividend
or split, recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares or other similar corporate change, Company
shall make an adjustment in the number or kind of Performance Stock then held
in the Performance Stock Account.
6. Miscellaneous Provisions.
a. Company may terminate this Agreement at any time; provided, however,
that any Performance Stock granted prior to such termination shall not be
adversely affected by such termination and shall continue to be governed by and
subject to the terms and provisions of this Agreement.
b. This Agreement may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
c. Employee's rights and interests under this Agreement may not be
assigned or transferred. In the case of Employee's death, payment due under
this Agreement shall be made to Employee's beneficiary, as designated below
(which designation may hereafter be amended), or in the absence of a
designation, to Employee's estate.
d. Neither this Agreement nor any action taken hereunder shall be
construed as creating any right to be retained in the employ of Company or its
subsidiaries.
e. The Performance Stock Account shall at all times be entirely unfunded
and no provision shall at any time be made with respect to segregating assets
of Company for payment of any benefits hereunder. This Agreement does not
create or confer any interest in any particular assets of Company by reason of
the right to receive a benefit under this Agreement, and Employee will have
only the rights of a general unsecured creditor of Company with respect to any
rights under this Agreement.
f. Company shall have the right to deduct from all awards any taxes
required by law to be withheld with respect to such awards.
<PAGE> 19
SOUTHSIDE BANCSHARES CORP.
Date 04/25/96 By: /s/ Howard F. Etling
---------------------
Title: Chairman of the Board
Date 04/25/96 By: /s/Thomas M. Teschner
---------------------
Thomas M. Teschner
<PAGE> 20
BENEFICIARY DESIGNATION
Full Name of Beneficiary: Susan R. Teschner
Residence 6312 Christopher Winds Ct.
Address of
Beneficiary: 6312 Christopher Winds Ct.
Beneficiary's Social Security no.: ###-##-####
Beneficiary's Relationship to Employee: Wife
Initials: Company: /s / HE Employee: /s/ TMT
----------------- -----------------
<PAGE> 21
FIRST AMENDMENT TO THE DEFERRED COMPENSATION AGREEMENT
DATED APRIL 25, 1996
THIS AMENDMENT is dated as of August 27, 1998, and is by and between the
SOUTHSIDE BANCSHARES CORP., a Missouri corporation located in St. Louis,
Missouri (the "Company") and THOMAS M. TESCHNER (the "EMPLOYEE").
RECITALS:
1. On April 25, 1996, the Employee and the Company entered into a
certain Deferred Compensation Agreement (the Agreement").
2. The Company and the Employee agree that it is in the best
interests of each party to amend the Agreement as provided below.
NOW THEREFORE, the Agreement is amended as follows:
1. Section 6 of the Agreement shall be amended to become new
Section 8 and new Section 6 is added to read as follows:
"6. Death Benefits.
Death During Active Service. If the Employee dies while in the
active service of the Company, the Company shall pay to the
Employee's beneficiary the benefit described in this Section 6.
a. The benefit under this Section 6 is $3,143,878.
b. The Company shall pay the benefit to the Employee in a lump
sum within 30 days of the date of the Employee's death."
2. New Section 7 is added to the Agreement to read as follows:
"7. Beneficiaries.
a. The Employee shall designate a beneficiary by filing a
written designation with the Company. The Employee may revoke
or modify the designation at any time by filing a new
designation. However, designations will only be effective if
signed by the Employee and accepted by the Company during the
Employee's lifetime. The Employee's beneficiary designation
shall be deemed automatically revoked if the beneficiary
predeceases the Employee, or if the Employee names a spouse as
beneficiary and the marriage is subsequently dissolved. If the
<PAGE> 22
Employee dies without a valid beneficiary designation, all
payments shall be made to the Employee's surviving spouse, if
any, and if none, to the Employees's surviving children and
descendants of any deceased child by right or representation,
and if no children or descendants survive, to the Employee's
estate.
b. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such
benefit to the guardian, legal representative or person having
the care or custody of such minor, incompetent person or
incapable person. The Company may require proof of
incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Company from all
liability with respect to such benefit."
3. New Section 8 (formerly Section 6 of the Agreement) is amended
by adding new subsection (g) to read as follows:
"g. Claims and Review Procedures.
i. Claims Procedures. The Company shall notify the
Employee's beneficiary in writing, within ninety (90) days
of his or her written application for benefits, of his or
her eligibility or ineligibility for benefits under the
Agreement. If the Company determines that the beneficiary
is not eligible for benefits or full benefits, the notice
shall set forth (1) the specific reasons for such denial,
(2) a specific reference to the provisions of the
Agreement on which denial is based, (3) a description of
any additional information or material necessary for the
claimant to perfect his or her claim, and a description of
why it is needed, and (4) an explanation of the
Agreement's claims review procedure and other appropriate
information as to the steps to be taken if the beneficiary
wishes to have claim reviewed. If the Company determines
that there are special circumstances requiring additional
time to make a decision, the Company shall notify the
beneficiary of the special circumstances and the date by
which a decision is expected to be made, and may extend
the time for up to an additional ninety-day period.
ii. Review Procedure. If the beneficiary is determined by
the Company not to be eligible for benefits, or if the
beneficiary believes that he or she is entitled to greater
or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by
filing a petition for review with the Company within sixty
(60) days after receipt of notice
<PAGE> 23
issued by the Company. Said petition shall state the specific
reasons which the beneficiary believes entitle to him of her to
benefits or to greater or different benefits. Within sixty (60)
days after receipt of the notice issued by the Company. Said
petition shall state the specific reasons which the beneficiary
believes entitle him or her to benefits or to greater or
different benefits. Within sixty (60) days after receipt by the
Company of the petition, the Company shall afford the
beneficiary (and counsel, if any) an opportunity to present his
or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the
pertinent documents. The Company shall notify the beneficiary of
its decision in writing, and the beneficiary (or counsel) shall
have the right to review the pertinent documents. The Company
shall notify the beneficiary of its decision in writing within
sixty-day period, stating specially the basis of its decision,
written in a manner calculated to be understood by the
beneficiary and the specific provisions of the Agreement on
which the decision is based. If, because of the need for a
hearing, the sixty-day period is not sufficient, the decision
may be deferred for up to another sixty-day period at the
election of the Company, but notice of this deferral shall be
given to the beneficiary."
IN WITNESS OF THE ABOVE, Employee has executed this First Amendment and
the Company has caused its duly authorized officers to execute this First
Amendment.
Employee: Company:
THOMAS M. TESCHNER SOUTHSIDE BANCSHARES CORP.
\s\ Thomas M. Teschner /s/ Howard F. Etling
-------------------------- -------------------------------
Its Chairman of the Board
--------------------------
<PAGE> 1
EXHIBIT 10 (c)
SECOND AMENDMENT TO THE DEFERRED COMPENSATION
AGREEMENT DATED APRIL 25, 1996
THIS AMENDMENT is dated as of March 25, 1999, and is by and between the
SOUTHSIDE BANCSHARES CORP., a Missouri corporation located in St. Louis,
Missouri (the" Company") and THOMAS M. TESCHNER (the "Employee").
RECITALS:
1. On April 25, 1996, the Employee and the Company entered into a
certain Deferred Compensation Agreement, as amended (the
"Agreement").
2. The Company and the Employee agree that it is in the best
interest of each party to amend the Agreement as provided below to
reflect that certain three for one stock split, payable in the form
of a stock dividend of two shares of common stock for each common
share outstanding on November 15, 1998 to shareholders of record on
November 2, 1998.
NOW THEREFORE, the Agreement is amended as follows:
1. The first paragraph of Section 2 of the Agreement is amended to
read as follows.
"2. Grant of Awards. For each calendar year beginning on January 1,
1998 during the term of this Agreement, Employee will be granted (as
of the last business day of each such year) such number of whole
and/or fractional shares of Performance Stock, at a deemed value of
the bid price of the Company's publicly traded common stock on the
last trading day of the Plan Year in the case of 2.a. and 2.b. and
Five Dollars and Thirty Three Cents ($5.33) per share in the case of
2.c., as shall have a value equal to the sum of:"
IN WITNESS OF THE ABOVE, Employee has executed this Second Amendment and
the Company has caused its duly authorized officers to execute this Second
Amendment.
Employee: Company:
THOMAS M. TESCHNER SOUTHSIDE BANCSHARES CORP.
/s/ Thomas M. Teschner /s/ Howard F. Etling
---------------------- --------------------------
Thomas M. Teschner
Its Chairman of the Board
--------------------------
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHSIDE
BANCSHARES CORP'S QUARTERLY REPORT ON FORM 10 Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 20,223
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 25,150
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 147,165
<INVESTMENTS-CARRYING> 72,779
<INVESTMENTS-MARKET> 73,144
<LOANS> 340,646
<ALLOWANCE> 6,138
<TOTAL-ASSETS> 631,975
<DEPOSITS> 517,095
<SHORT-TERM> 46,556
<LIABILITIES-OTHER> 4,164
<LONG-TERM> 0
0
0
<COMMON> 8,985
<OTHER-SE> 55,175
<TOTAL-LIABILITIES-AND-EQUITY> 64,160
<INTEREST-LOAN> 7,200
<INTEREST-INVEST> 3,129
<INTEREST-OTHER> 406
<INTEREST-TOTAL> 10,735
<INTEREST-DEPOSIT> 4,446
<INTEREST-EXPENSE> 5,024
<INTEREST-INCOME-NET> 5,711
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,635
<INCOME-PRETAX> 1,910
<INCOME-PRE-EXTRAORDINARY> 1,910
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> .17
<EPS-DILUTED> .16
<YIELD-ACTUAL> 4.05
<LOANS-NON> 4,826
<LOANS-PAST> 375
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,192
<CHARGE-OFFS> 268
<RECOVERIES> 184
<ALLOWANCE-CLOSE> 6,138
<ALLOWANCE-DOMESTIC> 6,138
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
